Attention to PBM vertical integration will continue through 2025

In this article, we re-capped the top trends from the last three months of Access events from Informa Life Sciences. Our last trend was the vertical integration of PBMs, in this regard to the PBMs’ white labeling of biosimilars, further complicating the access professionals’ visibility into the supply chain. However, this is just one more example of PBM practices that have become a bridge too far.

This month, BRG released its deep dive on the pharmaceutical supply chain from 2013 to 2023, which was sponsored by PhRMA. [hat tip to Brian Reid’s Cost Curve].

The report drew the reasons for the continued growth behind for-profit pharmacy chain profit margins, created by 2010 guidance on the 340B program. It then explained, “Using vertically integrated supply chains consisting of pharmacies, PBMs, and health plans, for-profit corporations have sought to leverage their market power to drive growth in the 340B program and capture greater profits related to 340B sales.”

The report’s authors closed their discussion with the comment: “Brand manufacturers retain a shrinking share of medicine expenditures each year, and half of the total spending on brand medicines now flows to nonmanufacturer supply chain stakeholders including PBMs, insurers, providers, and the government. These trends are expected to continue in the foreseeable future in the absence of broad changes to the pharmaceutical marketplace in the US.”

While the FTC filed a lawsuit against the three largest PBMs in regard to practices “that have artificially inflated the list price of insulin drugs,” in September, the case is still winding through the courts.

And in what is most likely the last meeting of the FTC with a Biden-appointed chairperson at the helm on January 14, the topic of PBMs and contracting practices in regard to specialty drugs will be reviewed.

Industry watchers have noted that the Trump’s choice for FTC chairperson would most likely continue to examine the PBMs in regard to antitrust practices.

In mid-December, bipartisan legislation was introduced by two Republican and two Democratic Representatives and Senators. Called “Patients Before Monopolies (PBM) Act,” it would prohibit joint ownership of PBMs and pharmacies, a gross conflict of interest that enables these companies to enrich themselves at the expense of patients and independent pharmacies.

One last note on federal oversight, HHS OIG announced in April 2024 that it would begin its “Audit of Vertically Integrated Medicare Part D Sponsors” on behalf of CMS. Again, familiar reasoning behind action… “In recent years, the pharmaceutical market has experienced a wave of vertical integration between PBMs, health insurers, and pharmacies…One such concern is that, by owning many links in the chain, a vertically integrated Medicare Part D sponsor may inflate drug prices.” The report determining the impact on prices for covered Part D drugs will not be available until 2026.

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